[Paleopsych] failure of the system

Lynn D. Johnson, Ph.D. ljohnson at solution-consulting.com
Tue Jan 25 02:35:15 UTC 2005

Actually, I view this a bit differently. Chris Rauh's question about 
people who 'got easy money on a free market' may be an artifact of too 
much socialism in his education <grin, wink at Chris>. In economics, 
people who get money through the free market are offering a socially 
useful service. Generally they work very hard at that for that money. 
Michael Milliken, for example, was loathed for his work in junk bonds, 
yet some economists praised him as helping the market be more efficient. 
The free market almost never gives money away easily.

The other angle is when wealthy families let non-working members 
benefit, such as the wasted life of Paris Hilton. Here is an interesting 
article about that. Here I agree completely with Rauh; unearned income 
is a socially destructive force. Michael's phenomenon is called 
apoptosis or programmed cell death, and it occurs when the cell is 'not 
useful.' My Scotch Pines do that because they have grown too close 
together and the needles that cannot get sun die off.

Cargill, it appears, tried to convert the parasitic members of the 
family into productive forces. See also the book, The Millionaire Next 
Door and especially the chapter on giving children unearned income.
Bread And Circuses
Brigid McMenamin, Forbes Magazine <http://www.forbes.com/forbes>, 12.25.00

Family members who work in the business tend to view nonworking 
shareholders as parasites, explains Michael Horvitz, a partner at 
Cleveland law firm Jones Day Reavis & Pogue who helps rich families with 
such problems. Shunted aside, the nonworking shareholders, often 
younger, can't understand why their paper wealth doesn't mean more cash. 
They tend to suspect their elders of cheating them to protect their own 
positions, perks, progeny and estate plans. "It's really an attitude 
problem," says Horvitz. Here are how some companies besides Milliken 
have quelled potential uprisings.

Company 	Est. size 	Founder(s) 	Notes
Belk Inc. est. 1888 retail 	$2.1 b (sales) 	William Belk & John M. 
Belk 	Since 1997 the Belk empire has been run by three third-generation 
men in their 40s, answering to an uncle who is still chairman. Though 
the family has had control issues in the past, they are running more 
smoothly these days. They bought out one dissident son of the founder in 
1996. Other family members sold some of their shares back, in connection 
with the 1998 consolidation of 112 corporations into Belk Inc.
Cargill Inc. Minneapolis agriculture 	$48 b (rev.) 	William W. Cargill 
In the mid '90s, nonworking cousins in their 40s, irked at poor 
dividends, threatened to sue Cargill. Their elders appeased them by 
guaranteeing a certain level of earnings paid as dividends and putting 
four younger relations on the board. The company also agreed to buy back 
shares at a price set by an independent appraisal and began holding 
regular family meetings, offering jobs, resume help and business seminars.
Cleveland Group Atlanta est. 1925 electrical equipment & aviation 	$160 
m (sales) 	Ras H. Cleveland 	The Cleveland Group is run by 
third-generation James Jr. with some fourth and fifth generation help. 
In 1990 the company asked 20-plus nonworking family shareholders to sell 
out at 40% less than fair market value. All agreed.
Freedom Communications Irvine, Calif. est. 1927 newspapers & tv & 
magazines & Internet 	$775 m (sales) 	R.C. Hoiles 	Freedom 
Communications has been in the founder's family for four generations. It 
is 100% family owned but since 1992 has had outside CEOs, and half its 
board members have been outsiders. In effort to keep young shareholders 
happy, starting in 1996 the company has offered internships and a 
training program. They also hold special meetings for all 
fourth-generation members and an intergenerational family council with 
traditions like "passing the microphone" a la TV talk shows. Founder's 
29-year-old great grandson Raymond C. H. Bryan serves on board.
Laird NortonCo. Seattle lumber, real est. fin. svcs est 1885 	$652 m 
(sales) 	Matthew G. Norton & William H. Laird 	Laird Norton has more 
than 200 shareholders, all heirs of two clans who have owned the company 
for seven generations. They make no promise of jobs for young 
shareholders, but keep them happy by helping them find their own careers 
with resume advice and by making investments in their new businesses. 
So, though the firm began offering to redeem shares in 1996, it has had 
few takers.

Sources: Cleveland Group; 2000 Dun & Bradstreet's America's Corporate 
Families; Freedom Communications; Dennis T. Jaffe of Aspen Family 
Business Group; Joseph Astrachan, Family Business professor at Atlanta's 
Kennesaw State University; Hoover's; 2000 Directory of Corporate 
Affiliation; Forbes' Statistics

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G. Reinhart-Waller wrote:

> Where I come from (out west in California)  it is called Freeloader.
> Gerry
> ----- Original Message ----- From: "Michael Christopher" 
> <anonymous_animus at yahoo.com>
> To: <paleopsych at paleopsych.org>
> Sent: Sunday, January 23, 2005 3:32 PM
> Subject: [Paleopsych] failure of the system
>>>> I am sure there are as many people who got easy
>> money on a free market and are living off that without
>> producing anything. Isn't that a failure of that
>> system?<<
>> --Interesting question. In the biological model, that
>> would have to be "yes". Cells that store up energy and
>> don't release it, are useless to the organism.
>> Michael
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